SOFR Rises to 3.92% on Oct. 23; Fed Funds Rate Holds at 3.88%

The two-basis-point gap between SOFR and the effective fed funds rate is the detail worth noting: secured overnight funding is pricing slightly above unsecured bank reserves, a configuration that can signal tightening balance-sheet capacity in repo markets rather than a policy shift. This matters most for leveraged cash-and-carry and basis trades, where overnight funding costs directly compress returns. Whether the spread widens further or reverts toward the fed funds rate is the open question.